World Economy

China Growth Losing Momentum

China Growth Losing MomentumChina Growth Losing Momentum

Profits of Chinese industrial companies rose 3.7% in May from a year earlier, slowing from April’s pace and adding to concerns that the world’s second-largest economy may be losing some momentum.

A return to profit growth in the first quarter and a strong jump in March in particular had fuelled hopes China’s economy was perking up, but data since then has suggested it may be stabilizing at best, Xinhua reported.

Profits in May rose to 537.2 billion yuan ($81.2 billion), the statistics bureau said on Monday.

In the first five months of this year, profits rose 6.4% compared with the same period last year, the National Bureau of Statistics said on its website.

But the performance was uneven across sectors, with profits in the mining sector falling 93.8% from a year earlier, the bureau said.

Industrial profits in January-April rose 6.5% from a year earlier, with April up 4.2%.

“Growth in industrial profits slowed down slightly in May compared with the previous month, but positive changes have emerged from the industrial sectors,” statistics bureau official He Ping said in a statement accompanying the data.

He added that profits of energy and raw material sectors including coal, steel and non-ferrous industries saw a resumption of growth in May.

In May, profits of the coal mining sector grew 2.5 times from a year earlier, snapping a falling streak over the past few years, the bureau said.

The pick-up in profits in these sectors might be an indication that Beijing’s efforts to remove excessive capacity, particularly in the coal and steel sectors, may be starting to have an effect.

The central government will earmark 27.64 billion yuan to help local governments pay for capacity closures in these two sectors this year.